Food Inflation to keep rising
The Ministry of Finance in a report to the government has said that even in the best case scenario of an ongoing lockdown the unemployment level in 2020 is expected to be 8.3 percent up from 2.7 percent in 2019.
This would translate into 27,500 unemployed people comprising of increasing number of overseas returnees, displacement of employees and growing numbers of new entrants in the job market.
The ministry said that economic disruptions due to the pandemic had a major impact on the labor market and has aggravated the unemployment situation.
However, under the worst case scenario, of repeated lockdowns unemployment is estimated to be at 47,438 people which is 14.4 percent of the total labour force.
The increase in the number of unemployed is mainly attributable to drop in sectoral economic loss from the pandemic.
The MoF said that under the current circumstances of unlocking of the lockdown, it is expected to bear positive outcomes on economic activities and employment. This is why an unemployment rate of 8.3 percent is being forecast.
In a slightly worse scenario without progressive unlocking the unemployment rate is expected to be around 10.2 percent.
In the case of the 8.3 percent unemployment rate around 41 percent of it coming to 11,296 people are those who will be displaced, 8,699 people or 32 percent are those who have been unemployed for a long time while new job entrants will comprise 7,521 people (2,947 graduates, 3,684 from class 12, 725 from TVET and 166 from class 10).
The MoF report said that general price levels are on an upward trend as the Consumer Price Index inflation had averaged a little over 2 percent in the six months prior to the detection of the first COVID-19 case in March 2020.
Since then, inflation has risen from 3.3 percent in March to 4.5 percent in June.
It says the rising inflationary pressure in the recent months are largely on account of rise in prices of food and non-alcoholic beverages (9 percent) and alcoholic beverages and betel nuts (7.5 percent).
It said supply chain disruptions in food production are expected to continue pushing up food prices over the medium term.
However, it said that, a sizeable drop in aggregate demand will offset potential cost-push inflation and thereby overall price level is expected to remain at a moderate level at around 5 percent.
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